Page:United States Statutes at Large Volume 121.djvu/219

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[121 STAT. 198]
[121 STAT. 198]
PUBLIC LAW 110-000—MMMM. DD, 2007

121 STAT. 198

26 USC 1361 note.

PUBLIC LAW 110–28—MAY 25, 2007

from an S corporation with respect to any restricted bank director stock (as defined in section 1361(f)), the amount of such distribution— ‘‘(1) shall be includible in gross income of the director, and ‘‘(2) shall be deductible by the corporation for the taxable year of such corporation in which or with which ends the taxable year in which such amount in included in the gross income of the director.’’. (c) EFFECTIVE DATES.— (1) IN GENERAL.—The amendments made by this section shall apply to taxable years beginning after December 31, 2006. (2) SPECIAL RULE FOR TREATMENT AS SECOND CLASS OF STOCK.—In the case of any taxable year beginning after December 31, 1996, restricted bank director stock (as defined in section 1361(f) of the Internal Revenue Code of 1986, as added by this section) shall not be taken into account in determining whether an S corporation has more than 1 class of stock. SEC. 8233. SPECIAL RULE FOR BANK REQUIRED TO CHANGE FROM THE RESERVE METHOD OF ACCOUNTING ON BECOMING S CORPORATION.

26 USC 1361 note.

(a) IN GENERAL.—Section 1361, as amended by this Act, is amended by adding at the end the following new subsection: ‘‘(g) SPECIAL RULE FOR BANK REQUIRED TO CHANGE FROM THE RESERVE METHOD OF ACCOUNTING ON BECOMING S CORPORATION.—In the case of a bank which changes from the reserve method of accounting for bad debts described in section 585 or 593 for its first taxable year for which an election under section 1362(a) is in effect, the bank may elect to take into account any adjustments under section 481 by reason of such change for the taxable year immediately preceding such first taxable year.’’. (b) EFFECTIVE DATE.—The amendments made by this section shall apply to taxable years beginning after December 31, 2006. SEC. 8234. TREATMENT OF THE SALE OF INTEREST IN A QUALIFIED SUBCHAPTER S SUBSIDIARY.

dkrause on GSDDPC44 with PUBLAW

(a) IN GENERAL.—Subparagraph (C) of section 1361(b)(3) (relating to treatment of terminations of qualified subchapter S subsidiary status) is amended— (1) by striking ‘‘For purposes of this title,’’ and inserting the following: ‘‘(i) IN GENERAL.—For purposes of this title,’’, and (2) by inserting at the end the following new clause: ‘‘(ii) TERMINATION BY REASON OF SALE OF STOCK.— If the failure to meet the requirements of subparagraph (B) is by reason of the sale of stock of a corporation which is a qualified subchapter S subsidiary, the sale of such stock shall be treated as if— ‘‘(I) the sale were a sale of an undivided interest in the assets of such corporation (based on the percentage of the corporation’s stock sold), and ‘‘(II) the sale were followed by an acquisition by such corporation of all of its assets (and the

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